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The news media and bloggers are having a lot of fun lately writing about whether we’re starting to see more “pocket listings” now that housing markets are heating up.
It makes for some dramatic reading, as reporters go out in search of crooked real estate agents who have secret listings so they can make more money at the expense of unsuspecting buyer and sellers.
But are pocket listings always bad for homeowners? Or are there some exceptions and shades of gray?
The term pocket listing is open to interpretation. There are regional variations, but the one thing they have in common is that properties are marketed without being entered into the multiple listing service.
Non-MLS listings are not an industry “best practice,” but they happen — and probably always will.
Here in Minnesota, we can withhold a listing from the MLS by having a special contract signed. The contract has a couple of paragraphs explaining to sellers the advantages of listing their home in the MLS, and the disadvantages of keeping it out of the MLS.
If a property isn’t listed in the MLS, critics say, the listing agent or brokerage is more likely to also represent the seller — a situation that’s often defined by state law as “dual agency” representation. But non-MLS listings do not always result in dual agency.
Dual agency must typically be disclosed, and it’s up to buyers and sellers whether they want to engage in a dual agency transaction. Here in Minnesota, buyers and sellers have to agree to dual agency in writing.
I am not a fan of dual agency, and I won’t always agree to dual agency. But I can sell a non-MLS listing without being a dual agent.
As an agent, I do not encourage or solicit pocket listings, they just kind of happen.
Each time I have worked with a one-time showing contract or a non-MLS listing it has been because clients have requested it, or I have offered it up as a creative solution to a problem or objection that a seller has raised.
I almost always know of a few people who would sell if they got the right offer. They don’t have any kind of contract with me at all. What good would I be as a real estate agent if I did not know people who would like to buy or sell real estate? Isn’t my job to know people who want to sell?
I always have the names and addresses of potential buyers and sellers in my head and on an old school white board on the wall by my computer.
Non-MLS listings are not exposed to as large of an audience as MLS listings are. The idea of exposing a property to the widest possible market seems solid on the surface. But in today’s market, how much exposure does it really take to get the best offer?
Each day a home is on the market on a zillion websites, being exposed to potentially millions of buyers, its value declines. I tell all of my sellers that they are more likely to get their asking price, or more, within the first two weeks the home is on the market. The longer it is on the market, the more the value goes down.
I put a house on the market in the beginning of May. The home got only three showings the first week. One of those showings resulted in a full-priced offer.
The buyers live close to the home and saw the “for sale” sign. Three showings is not very many. Were we supposed to say no to the full-priced offer and wait until more people saw the house, so that it could be exposed to a larger market?
Does national advertising to the widest possible audience help sell my listings? If I marketed them more heavily in Hawaii, would we start to see more people moving from Hawaii to Minnesota and buying up our listings?
Homeowners have a choice. If, after reviewing all the options, they have decided they do not want their home listed on our MLS, that is their choice.
If I find a buyer and they want to bring in their own agent, I don’t have a problem with that at all.
We are in a seller’s market, which is much different than the buyer’s market we just came out of. It’s not all that difficult to sell a house. In fact, with some houses, making a couple of phone calls should suffice.
Agent greed is not always at the center of an off-market listing. Sometimes a home can be sold quickly without ever being put on the market, and it’s the seller’s choice, not the agent’s.
I had one seller who did not want the neighbors to know. Sometimes it’s a matter of privacy. Sellers don’t want people traipsing through their home. They just want it sold they don’t want to go through the hassle.
What harm is done if I sell a house without it ever being advertised publicly, if I am able to get the seller’s asking price, or more? Isn’t it my job to sell houses?
Some sellers don’t even mind getting less money if they can sell quickly and quietly. Sometimes sellers can save on commissions. Agents will offer them a discount.
Right now with the shortage of homes for sale in some neighborhoods I have actually knocked on a few doors for my buyers. If the homeowners will sell, I can just charge the buyers a commission, or I can use a one-time showing contract and never list their home.
There will always be pocket listings and for-sale-by-owners and private sales. Are we really serving consumers by closing every loophole that could keep a home off the MLS, or are we just serving the interests of our MLSs and various third-party websites?
By the way, I have a listing coming on the market next week in a really hot neighborhood. It has four bedrooms and two baths, it is bungalow style and will be listed for less than $230,000. It won’t be on the market more than a day or two … interested? Call now!
Teresa Boardman is a broker in St. Paul, Minn., and founder of the St. Paul Real Estate blog.